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What is piercing the corporate veil?

Piercing the corporate veil is a theory under the law that allows somebody, a plaintiff, to pierce through a corporation. The classic example, maybe the corporation that owes you money doesn’t have any money, but there’s someone standing behind that corporation, maybe an owner or another company that does have money. The plaintiff wants to pierce through the first corporation and get to the money behind that corporation.

The law allows that to happen in limited circumstances. Basically, you have to show, number one, that the pierced company, the one standing in the front, is controlled or is the alter ego of the person standing behind, the person with the real money. Secondly, you’ve got to show that the person with the money was using this pierced corporation for fraud or for improper purposes. Finally, you have to show that all of these resulted in damage to the plaintiff, which we frequently can show.

Piercing the corporate veil is a powerful tool applied in limited circumstances, but it allows the person to get to where the money really is.

Please Note: Rabin Kammerer Johnson provides these FAQ’s for informational purposes only, and you should not interpret this information as legal advice. If you want advice as to how the law might apply to the specific facts and circumstances of your case, please click here to contact one of our attorneys.

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